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The idea of creating a business jet that outperforms the competition is standard fare, but actually pulling that off while selling the jet for less is a head turner; enter Nextant Aerospace. Since October 2011, Nextant has been delivering the world's only FAA-certified remanufactured business jet, the 400XT. The company is currently working to improve output to 40 aircraft per year as it seeks to fill demand for more than 80 orders (and counting) already on the books. To say that Nextant's approach represents a paradigm shift in aircraft production may be hyperbolic; but saying that the company's product is superior may be statistically demonstrable. It may also be good reason to suspect that others may follow. Right now, this is a success story. And looking forward, how Nextant did it may be just as important as why.

The idea was developed by aviation entrepreneur Kenneth Ricci. And Nextant's primary startup capital came from Ricci's company, Directional Aviation Capital. Back in 2007, Ricci was already drawing on 25 years of experience in the industry when he came to a conclusion that would evolve into the Nextant 400XT. Ricci told AVweb he realized that, "if you and I sat down and drew out our perfect airplane on a napkin, it would take something like $600-800 million to bring that plane through research and design all the way through to certification." In the world of business jets, that's the entry fee. And it's substantial. But Ricci said that when he stepped back and took a broad look at the business, he came away with a new perspective.

"I've been in aviation for 30 years, now. Back in the day, what you saw were huge advances," says Ricci. He was talking about a time when each successive airframe showed what he termed "huge advances" in aerodynamics and mechanical design elements when compared against the aircraft that came before. "Then we entered a new phase," says Ricci. Today, he sees an industry that produces new aircraft without truly significant advances in those fundamental areas -- with two important exceptions. And, for Nextant, those exceptions have made all the difference. Today, says Ricci, "the only thing that's really changing are the engines and avionics ... the computerization. There are no leaps in aluminum landing gear..." and other major aircraft components. So, he argues, "why cleansheet?" And that's how it started.

Where other companies were investing hundreds of millions of dollars in research and design, Ricci was seeing very shallow returns. Expensive new jets were hitting the market without offering significant advantages over older jets. There were no huge advances in the aerodynamics and structure -- the fundamentals -- that, in Ricci's mind, could justify the cost. And that, he says, made older airframes inherently more competitive. "We thought if we could find a way to remanufacture and rebuild with the significant updates (engines and avionics), then we'd really have something." Ricci estimated it would take about seven million dollars to do something like that. And he was wrong.

"It's one thing to have the idea and another to work it out," says Ricci. That sentence translated directly into investment dollars that poured into Nextant from Directional Aviation Capital. Ricci says Directional found "it took about 20 (million dollars)" to engineer the significant updates -- the engines, avionics, and interiors -- into an existing design "and another 10 (million dollars) to get it into production." In short order, Directional learned that its seven million dollar idea worked out to about 30 million in practice. But it also learned something else: the math still worked. And there are important reasons for that.

In developing the idea, Ricci kept some key principles in mind. "It had to be a current production aircraft. We wanted to look at airplanes that had significant room for improvement. And there had to be a significant existing fleet that could become prospects." When Directional applied those core principles, the field narrowed and ultimately they were looking at one jet, the Hawker Beechjet 400A/Hawker 400XP. From there, the distinction of Nextant's process became evident. "What we do that's different from a mod shop or aftermarket facility ... you don't bring us your airplane to improve. We go out into the marketplace. We buy it. It goes into our shop. And it comes out as a new product." And that matters in ways that may be less obvious.

Ricci says it's that approach that allowed the company to better control the quality of its product, "because we're doing it from beginning to end. We're not inheriting someone else's work." As a result, every Nextant 400XT remanufactured jet shares the same standard equipment because it undergoes the same process. For Nextant, that standardization brought other rewards made manifest in increased efficiency of production, and time and money saved. "A plane comes through our shop every two weeks, and we can run it like a production line," says Ricci. "We have everything standardized, from wiring to maintenance manuals." It's a predictable process from start to finish. In fact, it's FAA certifiable. And that brings benefits additional on the user's end.

When an aircraft goes into a mod shop, it can come out with a very wide range of associated paperwork represented by various supplements tacked onto the back of a flight manual for each aircraft. Nextant's process produces standard results with conformity across all aircraft and their associated paperwork. It makes life easier for the end-user/operator and pilots and has an impact on the jet's place in the market. And that affects another essential part of Nextant's program: financing.

"If you own a Beechjet and you decided to you wanted to modify it, you might own a $2 million aircraft, with $1.5 million in financing. If you want to upgrade the engines and avionics, you're looking at maybe $2.5 million in costs. And if that's the case, where does the $2.5 million come from?" asks Ricci. The 400XT presents a uniform finished product that's FAA certified. "It's more salable," says Ricci, "nobody's going to finance just the modification package." Nextant has positioned itself to create a product of known value in the marketplace. With its own separate line item in blue book valuations, the Nextant 400XT can maintain an active trading market. The approach has paid off. Potential customers can find whole-aircraft financing for the Nextant 400XT, and that greatly expands the jet's market.

But Nextant had even more market leverage. "We own Flight Options," Ricci said. Over 14 years, Flight Options has evolved into a full service private aviation company and fractional jet provider. "The biggest demand is the Palm Beach line -- that's up and down the east coast," Ricci said of Flight Options. "Operating Beechjets on the route becomes challenging there when you start filling the seats. Our modified aircraft meets that challenge."

Ricci knew the fuel specifics the 400XT would need to meet to become more competitive on the route. What he didn't know was that in fitting new more efficient engines to the Beechjet, his engineers could identify and remove "a huge amount" of nacelle drag. Ricci was shooting for a 1700 nm range with NBAA reserves, compared to about 1,330 offered by the original Beechjet. With the new engines, and the drag improvements, "we ended up with over 2,000."

In the end, Nextant's approach yields a $4 million like-new jet with a warranty, where an all-new similar aircraft will cost about $8 million. The cost differential is a product of the relevant margins, materials and overhead. By piggy-backing on the design efforts of the Beechjet 400, Nextant held its non-recurring engineering costs (NRE) to what was associated with fitting new engines and avionics. Ricci estimates he spent $30 million where a clean sheet design could have cost upwards of $600 million. And here we can say that the savings do trickle down to you.

The Nextant 400XT is faster, has more range, and offers lower operating costs (or some combination of those) than some competing new airplanes costing twice as much. The 400XT comes to its customer roughly 88 percent brand new. Everything in it that had a life limit has been replaced and the airframe, if properly maintained, has no life limit. It runs FADEC-controlled Williams FJ44-3AP engines that are quiet and efficient. It does its best work carrying three to four but can carry up to eight. Up front, pilots are treated to Rockwell Collins Pro Line 21 avionics that offer large clear displays. So what's left?

There are more than 600 Beechjet airframes in service, worldwide, that form the foundation of Nextant's potential materials base. Nextant hopes to remanufacture more than three dozen of those jets in 2013, creating 40 Nextant 400XT aircraft from six production lines at its Cleveland, Ohio, factory. And it doesn't plan to stop there. By late September 2012, the company was already planning a next project that will introduce a larger jet to the Nextant process. Expect an announcement sometime after the NBAA convention, this November. If past experience proves predictive, Ricci says Nextant hopes to have a flight test sample of that new project by NBAA 2013 and a certified product two years after that, in 2015.

Through its success, Nextant is making the case that the future of business jet production need not rely entirely on the production of new business jets, but the certified remanufacture and improvement of existing aircraft. So long as money matters, and those airframes exist, the case is strong and suggests an open ended question. Could the same thing be done for the aircraft you fly?

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